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European shares set for weekly losses as virus cases surge

Stock MarketsOct 16, 2020 04:35AM ET
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© Reuters. A traders reacts at stock exchange in Frankfurt

By Sagarika Jaisinghani

(Reuters) - European shares bounced from two-week lows on Friday but were still set for weekly losses after a sell-off that was marked by fears of a second wave of COVID-19 infections, Brexit-related uncertainty and doubts about more U.S. fiscal stimulus.

The pan-European STOXX 600 index (STOXX) was up 0.9% after posting its worst session in more than three weeks on Thursday.

Auto stocks (SXAP) jumped 2.9% after Daimler (DE:DAIGn) and Volvo (ST:VOLVb) posted stronger-than-expected results.

A resurgence in coronavirus cases across Europe has stoked fears about more sweeping lockdowns, with London and Paris - Europe's two richest cities - again living under the shadow of state-imposed restrictions.

"This raises the very real fear that what is a stop-gap measure actually turns out to be something slightly longer term, which could see the collapse of hundreds of businesses as well as the decimation of an already fragile economy," said Michael Hewson, market analyst at CMC Markets UK.

Focus on Friday will be on signs of progress in Brexit negotiations, with Prime Minister Boris Johnson set to give Britain's response to the European Union's demand that he either gives more concessions to secure a trade deal or braces for a disorderly Brexit in three months.

London's FTSE 100 (FTSE) rose 1.2%, but was still on course to snap a two-week gaining streak. (L)

The benchmark STOXX 600 was also headed for its first weekly decline in three as demand for equities globally was dented by mixed signals on whether Washington would agree on more fiscal stimulus before the Nov. 3 presidential election.

U.S. President Donald Trump said on Thursday he was willing to raise his offer of $1.8 trillion for a deal with Democrats in Congress, but the idea was shot down by his fellow Republican, Senate Majority Leader Mitch McConnell.

"The market's on-again-off-again love affair with impending stimulus masks the fact that uncertainty is bristling ahead of an expected choppy period," said Stephen Innes, markets strategist at Axi.

In company news, Thyssenkrupp (DE:TKAG) surged 15.8% as a report said privately held Liberty Steel Group is set to bid for the ailing steel unit of the company as soon as Friday.

LVMH (PA:LVMH) jumped 6.8% as recovering sales of Louis Vuitton handbags helped it contain the fallout from the coronavirus crisis in the third quarter.

Shares of other luxury goods makers including Moncler (MI:MONC) and Burberry (L:BRBY) rose more than 3%.

Telecoms (SXKP) and real estate (SX86P) were among the few decliners in morning trading.

European shares set for weekly losses as virus cases surge
 

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